Aligning Your Paycheck With Your Plan
Once tax season wraps up, many people are surprised by the outcome of their return. Some receive a larger refund than expected, while others may owe more than they anticipated.
Either way, your tax return can offer valuable insight into how well your paycheck, withholding, and overall financial plan are aligned.
It may mean too much tax was withheld. While it feels like a bonus, you were essentially giving the government an interest-free loan.
If you owed more than expected, it is worth reviewing your withholding now to avoid a similar surprise next year.
Adjusting your withholding or estimated tax payments can help smooth out your cash flow and better align your paycheck with your financial goals. Even small adjustments can make a meaningful difference over the course of a year.
If you’re unsure whether your withholding is aligned with your overall tax picture, the Internal Revenue Service provides a helpful online tool:
IRS Tax Withholding EstimatorYour tax return can reveal whether your paycheck withholding is aligned with your overall tax picture. Ideally, your tax preparer should help you evaluate whether adjustments may be appropriate for the year ahead.
If that conversation isn’t happening, at Parker Advisors we’re always happy to help review your situation and talk through your options!